Freight Forwarder vs NVOCC

Freight forwarders and NVOCCs (Non-Vessel Operating Common Carrier) are two entities that have become virtually synonymous over the years. The primary reason for this is business expansion that led many companies to function as both a freight forwarder and a NVOCC. Strictly speaking, there are distinct differences between freight forwarders and NVOCCs; the biggest one is how they act in relation to the cargo. An NVOCC acts as the carrier of the cargo being sent. In comparison, a freight forwarder doesn’t act as a carrier. A freight forwarder only acts in the behalf of the owner of the cargo to facilitate the passage of the cargo from the point of origin to the destination. They contract carriers to pick the cargo up, board it on a ship or a plane, then another carrier to pick it up at the port; along with the entailing paperwork and documentation.

You can easily discern this by the fact that freight forwarders do not issue a bill of lading while NVOCCs do. A bill of lading is also known as a contract of carriage and is a legal document that binds both parties to the terms agreed upon. A bill of lading is important as it holds the NVOCC liable if and when the cargo becomes lost or damaged while in transit where compensation is often necessary. A freight forwarder doesn’t issue a bill of lading, so it isn’t liable for any damage or loss suffered while the cargo is in transit. It is the freight forwarder’s job though to get the bill of lading from the carriers that it would contract. The liabilities of the freight forwarder only extend over possible errors on their part like incorrect or incomplete paperwork.

As already stated above, many of the big shipping companies act as NVOCCs and freight forwarders in full or some extent. In these cases, the companies take all the responsibility as the forwarder and as the carrier. It is also very common for smaller NVOCCs and freight forwarders to have long standing contracts or agreements. It is beneficial for both parties to have work together with the other.

Summary:

1.An NVOCC acts as the carrier while a freight forwarder does not
2.An NVOCC issues a bill of lading while a freight forwarder does not
3.An NVOCC is responsible for loss or damage while a freight forwarder isn’t

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